Iron and steel industry in large losses is well known thing, as part of the private enterprises fall because of funding problems, China's steel production capacity to go into the accelerated period, due to the amount of loss is too large state-owned enterprises, the most serious of excess steel industry to become "stands out." In the past month the time, Prime Minister Li Keqiang declared on many occasions to increase repaying "zombie companies" efforts, Shandong, Zhejiang and other places have begun to thoroughly check the number of "zombie companies." The large-scale mergers and acquisitions will also be opened.

After nearly two years of sluggish operation period, steel prices have been in trouble most bitter suffering, industry debt ratio has exceeded 70 percent, while lack of funds also powerless to make this part of the business, the lack of transformation and upgrading of the capital. On the other hand, there are also some mills due to good management and abundant capital, has been ahead of other companies, to become the industry leader. 69 private steel mills in Hebei Province as an example, survey results show that from January to September this year, the survey of 69 private enterprises have 44 profit, most of the profit is Puyang Iron and Steel, profit 895 million yuan; 25 losses, The company is the largest loss Jiujiang loss 1.198 billion yuan.

Private steel enterprises heavy losses or insolvency, can only choose bankruptcy or waiting to be mergers and acquisitions, while state-owned enterprises can rely on blood transfusions to maintain bank protection and government, become what we call a "zombie companies." According to data released by the Ministry of Finance, the first 10 months of this year, state-owned enterprises total profit fell 9.8 percent, of which, the central enterprises fell by 11.3%; central rate debt ratio is 68%, local state-owned debt was 65%. It is understood that the presence of state-owned enterprises blind project and management deficiencies, the majority of business situation even worse than some private enterprises; but our government subsidies has considerable iron and steel enterprises in Shanghai and Shenzhen 35 iron and steel industry as the main listed companies last year alone, the government of their total financial assistance reached 6.1457 billion yuan, twice the number in 2011; however, according to statistics, last year, total losses of only 20 companies reached 8.4 billion yuan.

State Department policy in a routine briefing held recently, deputy director of SASAC, said party secretary Zhang Xiwu, "zombie companies" to the central enterprises to sustainable development and the quality and efficiency is a major obstacle to be suffering from the heart of the State Council , but also business profit minus the maximum bleeding. In this regard, the Central and the State Council determined to deal with "zombie companies" has been on the agenda.

Just after CTS publication "Hong Kong China Travel Service Group on the free transfer of significant assets announcement", to be held free transfer its Steel and Coke Company to Hebei SASAC, becoming the first domestic steel industry announced its withdrawal from the central rate .

It is understood that the SASAC will also be gradually introduced supporting documents on the disposal of "zombie companies", and Treasury officials also said the central government to allow some companies go bankrupt, no longer support. From September 13, the State Council jointly issued the "Guidelines on Deepening the Reform of state-owned enterprises" since the SASAC has issued nine supporting documents, and there are 10 documents late will continue to publish.

Through the efforts of both markets, government, iron and steel enterprises will be in a healthy direction, gradually withdraw from inefficient areas; however, the government's coercive measures will not be too aggressive, taking into account the reduction in capacity will cause some negative effects, such as a large number of unemployed workers , so this will be a slow process, expected in the next 1-2 years, through the "mixed change", to attract investment, mergers and acquisitions, etc., will eventually reach a substantial reduction of domestic steel companies and the formation of 2-3 demonstration bases policy objectives.